NYSE and dollar
In a week of significant falls in the prices of Arabica contracts in NY, the market followed the macro, rains in Brazil and resumption of coffee exports in Colombia. The trading session ended with the September/21 contract quoted at 151.60 USC/lb, a retreat of 765 points in relation to the previous Friday’s closing (11).
To control inflation in Brazil, the COPOM raised the basic interest rate to 4.25% p.a. (+0.75%), strengthening the Real, which is once again trading at R$ 5.00, the lowest it has been in a year. On April 2020, the Brazilian currency was quoted at R$ 6.00.
September/21: Min: 149.15| Max: 158.55 | Last: 151.95 USC/lb
BRL/USD: Min: 4.9933| Max: 5.1122 | Last: 5.0630
*Data as of the completion of this report
WEATHER
Temperatures are lower, registering between 6 and 14 °C during the early morning hours in the producing regions. In the first half of June there were light rains in the coffee park, but still below average.
Winter will start in Brazil in 3 days. According to SOMAR Meteorologia, the forecast for the next 7 days is dry and cloudy weather. The few precipitations will reach Espírito Santo, Zona da Mata of Minas Gerais, southern Bahia and northern Paraná.
DOMESTIC MARKET and CROP
With the falls in the stock market, the market was very slow and with few offers. For the new crop, business happened around R$ 800-830 per bag, varying with the region. Most purchases have been of coffees from the Zona da Mata region, where harvesting is more advanced (about 30%), and with a high percentage of screen 17/18, with good cupping profile and appearance, better than we have seen during the same period in recent years. The harvest in Sul de Minas is progressing smoothly, and it is estimated that about 15% has already been harvested in the region.
FOB EXPORTS
With the closing of the differentials against short-term replacement, due to the dollar and KCNY movements, the volumes traded on the FOB export were low. There was low demand for group 1 volume for the 21/22 harvest during the week.
The mismatch between current supply and demand prices FOB of Rio Minas has kept importers of this quality, which are very sensitive to price, more distant from new direct business with the origin. Some reported having found more attractive prices on the spot market.
LOGISTICS
The flow of coffee shipments is being impacted by the impasses of export logistics. In this critical scenario, communication with ship owners is fundamental, therefore we ask our clients to ask for the guarantee of equipment and space when hiring freight. Sending shipping instructions in advance is also important for us to place bookings as soon as possible. It is worth noting:
- There is a shortage of food-grade containers with Hapag Lloyd, Evergreen, CMA CGM and OOCL, which has caused many transfers and cancellation of bookings this week;
- MSC and Hamburg Sud have no space in vessels until the end of July, however, it is no longer so difficult to get containers with them;
- The shipowners have been changing routes and transferring vessels without previous notice, creating difficulties and extra costs for the exporter;
- With the scarcity of food-grade containers, some provisional measures have been taken in the container yards to give more fluidity to shipments:
- Shipowners have relaxed the use of containers of categories other than food-grade for food shipments. However, Atlantica, maintaining its commitment to quality and food safety, will continue to ship coffee only in food-grade containers;
- More recently, with the need for greater agility in the release of equipment, we have observed that shipowners have made available at origin some food-grade containers with a visual aspect below the standards we were used to finding 2 years ago, such as imperfections in the paintings and floor. However, in general, they do not influence the quality and safety of the cargo.
COVID-19 IN BRAZIL
Yesterday (17th), for the first time, Brazil applied over 2 million doses of vaccine against Covid-19 in the population.
People who received the first dose: 60,381 mi (28.5% of the population)
Fully vaccinated people: + 24,085 mi (11.37% of the population)
Cases: + 17.7 million
Deaths: 496,172 K
Let’s keep believing and investing in the coffee culture!
Take care,
Atlantica Coffee Team